The Address PM ●
November 1, 2019
The Perfect Tenant - Vital indicators to evaluate applicants
The perfect tenant is one who pays their full rent on time, does not damage the property and is pleasant to deal with. The entire screening process aims to assess the prospect tenant’s reliability, and avoid the ‘professional tenant’. In our experience, there are some key aspects that should be critically analysed.
Prescreen Your Tenants
Screening applications for every tenant is time consuming, you could significantly save time for you and the tenant, by carrying out a prescreen. This would show if a tenant is the incorrect fit for the property in question. If the applicant meets all the prescreen requirements, we can move onto the next screening step. The prescreen is a small interview which can be carried out over the phone or by email, when the applicant first contacts you.
An effective prescreen conversation would begin with a brief description of the property and its tenant requirements, then one would ask the following questions:
Why are you moving?
When are you looking to move?
What is your monthly income?
Would you agree to a criminal record, credit and eviction check?
Are you able to provide references from your employer and landlord?
Will you have anyone living with you?
Do you have pets?
Do you smoke?
There are two reasons to terminate the screening process after the prescreen:
The tenant applicant does not agree to authorizing credit and background checks or fails to provide references.
If after understanding the tenant requirements, the applicant fails to follow up and complete the application themselves.
Credit Report Analysis
The credit report has many uses. Firstly, it can be used to confirm the tenants name, address and date of birth. The fundamental purpose is however to find if the tenant has any of the following:
Repeated late payments
A history of previous evictions
Excessive debts- even if they have been paying rent on time in the past, having large debts can delay their ability to pay rent in the future
Once the report is analysed, a fair landlord would take an evaluative approach. A tenant may have debts due to unavoidable medical bills or there could be fraudulent charges on the report. It is useful to ask the tenant to clarify information, then make a logical judgment.
Income and Employment Checks
It is essential to verify the employment and income details with the applicant’s employer. Many times, the tenant would be looking to move due to a new employment, in which case a letter from the new employer would be needed. The tenant needs to be able to afford the rent. Some landlords use a ‘three times rule’, where the tenant’s salary after taxes should be three times the rent required, in order for them to reliably pay on time. Paystubs allows the landlord to sift out any fraudulent documents. It is good practice to carry out a debt-to-income ratio, if the ratio is high the tenant might not be able to pay rent on time. In addition to financial assessment, contacting employers may provide information about the applicant’s character. If the applicant has a poor job history and frequent job changes, it would warrant caution.
Criminal Background Check
If the applicant has previous convictions, especially pertaining to damage of property or the safety of others, you would want to reconsider renting your property to them.
Ask for Landlord References
The previous landlord(s) can be a valuable source of information, we like to contact at least two previous landlords. Ask the landlord: if the applicant paid rent on time, the condition of the property while they were renting, how long the lease was for, if there were any problems or breaking of lease, how they are to work with and what their general character is like. A nice question to end with is would they rent their property to the applicant again.
The landlord should do their due diligence to check local laws. By thoroughly screening tenants, the rental cycle can proceed with minimal problems.
At the Address Property Management, we remove all the hassle of screening for the landlord. Our robust system of screening tenants is key to maintaining your rental property and maximizing your returns.